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Thursday, 10 March 2011

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I heard awhile back that he was changing the charter on his PIMCO Total Return Fund so that he could invest in preferred stocks. This might be an interesting area to look into.

If he reckons interest rates are going up (you don't need to be a genius to see that) then the market value of US bonds will drop so selling is the appropriate reaction. It's not, as they say, rocket science. That he might get out of $-denominated paper is another issue: he'd be right because if the Fed keeps on printing money then - despite what "expert opinion" might say in Threadneedle Street and elsewhere - inflation will follow and the $ will weaken.

On a tangential point, our very own money-printing governor of the BoE told us that "it wasn't me" when the banks went haywire. As a letter writer (in the Telegraph, I think) wrote: King was the Governor of the Bank of England - not its janitor - why did he say or do nothing? Or worse - why did he encourage Brown's fantasies until the very last moment? What everyone conveniently forgets is that King was one of the signatories to the letter from 364 economists who (incorrectly) predicted ruin in the early days of the Thatcher goverment.

http://www.telegraph.co.uk/comment/personal-view/3623669/How-364-economists-got-it-totally-wrong.html

Yes, investing would be such a doddle but for the timing problem! As to your last point, it is, alas, yet another example of the degeneration of our ruling class whose only abiding thought is how to cling to their jobs for ever. I hadn't realised that King was one of the 364 'useless idiots' but it explains a lot.

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